Bitcoin just got a big credibility boost: 45 members of the Swiss parliament signed a postulate asking for Bitcoin to legally be treated as foreign currency like the Euro or the Dollar.

SummaryThe postulate demands to evaluate the opportunities of Bitcoin for the Swiss finance sector. It also states that Bitcoins raises a number legal questions and that the simplest way to answer them would be to clarify that Bitcoins should be treated like other foreign currencies. The goal is to clarify in a simple and straight-forward way how various laws such as the GWG (money laundering act), the MWSt (VAT act), or the KAG (securities act) are to be applied to Bitcoin. This not only paves the way for Bitcoin businesses and financial services in Switzerland, it is also a great precedent for other countries that look into how Bitcoin should be handled from a regulatory perspective.

What's nextThe next formal step is for the Swiss parliament to have a vote on the postulate (can take many weeks). If it passes (which is very likely as about 25% of the parliament already co-signed it), the Federal Council will answer the questions, which again can take many months. And then, if the Federal Council agrees, it would again take a while to adjust the relevant regulations. So it will take time until it becomes effective, but it already today sends a nice signal of how regulatory bodies should treat Bitcoin when the law is unspecific.

Translation of the press releasePress Release of the Parliamentary Group for Digital Sustainability (Parldigi)

Berne, 2013-12-09

The core team of the parliamentary group for digital sustainability wants the opportunities of Bitcoin to be evaluated and asks the Federal Council (the Swiss executive) a number of questions regarding legal certainty. At the same time, Parldigi takes its first steps with this novel open-source currency and has started accepting donations in Bitcoin.

Over the past weeks, Parldigi has intensely discussed Bitcoin internally. Its members, coming from major parties such as SP, FDP, GLP and the Greens, have concluded that Bitcoin and comparable digital currencies not only pose risks (as claimed in earlier postulates 13.3687 and 13.3854), but also opportunities for Switzerland's financial sector. Furthermore, as Bitcoin is already in use as a means of payment in Switzerland, it makes sense to ensure legal certainty regarding money laundering laws and VAT.

The Federal Council already wrote in his answer to postulate Kaufmann 13.3854 "Bitcoin and money laundering laws" that online-currencies like Bitcoin raise a number of economic, regulatory, as well as operational questions. Legally, they are hard to categorize as they are decentrally organized and neither have an identifiable issuer nor someone else who guarantees a value.

It is likely that those questions could be answered by making clear that Bitcoins and similar electronic means of payment are to be treated like foreign currencies. Hereby, it would be made clear how to apply laws such as GWG, KAG, and MWSTG to Bitcoin and legal certainty would be created.

In addition to the points raised in postulate Schwaab 13.3687 "Evaluate the risks of online-currency Bitcoin", the Federal Council shall also answer the following questions:

1. What opportunities does the Federal Council see in Bitcoin and similar online-currencies?2. Does the Federal Council see any reasons not to generally treat Bitcoin and comparable online-currencies like foreign currencies?3. Which regulatory instruments does the Federal Council have to ensure legal certainty for Bitcoin and comparable online-currencies?4. Should regulatory adjustments be necessary, what would the timeline of implemetation look like?

Parldigi also takes its first step with this novel currency and has started accepting donations in Bitcoin. If you want to support parldigi in advancing digital sustainability in Switzerland, feel free to send donations to address 16qpAVM718XzWEH8LKJZetKutW5R8bNMNn . (Sidenote by translator: there are no restrictions for political donations in Switzerland. Faced with the problem of powerful politicians being influenced by donations, many countries created laws to restrict such payments. Switzerland chose the other solution and restricted the power of politicians instead. )

... the simplest way to answer them would be to clarify that Bitcoins should be treated like other foreign currencies. ... This not only paves the way for Bitcoin businesses and financial services in Switzerland, it is also a great precedent for other countries that look into how Bitcoin should be handled from a regulatory perspective.

Watch out.Ok, Bitcoin being defined as "foreign currency" in Switzerland might be interesting, because Switzerland enjoys a good deal of financial freedom (relatively to the rest of the world, at least). AFAIK, people there are free to have bank accounts in foreign currencies, use them as they want etc. But in many (most?) places of the world, such definition would be very negative. In many jurisdictions, foreign currency is something "common folk" can barely touch, and when they're allowed to, regulations are strict. Just take Argentina as an example. Bitcoin being defined as foreign currency there would be almost the equivalent of banning it.

... the simplest way to answer them would be to clarify that Bitcoins should be treated like other foreign currencies. ... This not only paves the way for Bitcoin businesses and financial services in Switzerland, it is also a great precedent for other countries that look into how Bitcoin should be handled from a regulatory perspective.

Think we may see some alignment within Europe in regards of tax treatment soon. Recent musings from UK taking Bitcoin down a 'voucher' route, is not going to happen. It now looks like HMRC (and possibly other European jurisdictions), are going to declare it currency, but not legal tender.

This says categorizing Bitcoin as foreign currency would make clear how it would have to be handled regarding AML, captial gains tax and VAT.

How would it be handled in switzerland? The VAT case seems clear. VAT applies when buying product, no matter what currency is used (not on the currency itself, of course, this is something still unclear in the german case).